Foreign investors buying cheap properties in Japan

Foreign investors buying cheap properties in Japan

An older apartment building in the greater Tokyo metropolitan area was purchased by an Australian investor in June. A 40 yen Chinese investor recently agreed to purchase a one-bedroom apartment in Tokyo at a bargain price between 30 million yen and 40 million yen.

Instead of living there, the buyer is taking advantage of the weak yen to make a timely investment.

More foreign investors began looking for properties in Japan after the depreciation of the yen, said Masahiro Kusanagi, an official of the Nihon Agent Inc., which sold the apartment. Some are selling their properties at inflated prices by taking advantage of the weak yen. Overseas investors are buying real estate properties in Japan at bargain prices because of the recent depreciation of the yen.

Under the agreement struck at the end of July, the current occupant of the one-bedroom apartment in the four-year old building in Tokyo will continue to live there even after its owner changes. The investor plans to exchange yuan for yen before making the payment in a lump sum.

Nihon Agent received more inquiries from investors in the United States and China, but also from those in Southeast Asia and the Middle East. According to Nihon Agent, many of the firm's customers are investing in Japanese properties for the first time.

The number of inquiries between April and June went up by 20 percent from the previous quarter, according to Shenjumiaosuan, a website that provides information on Japanese properties in Chinese.

The yen's strength is being weakened, and that coincides with the rapid weakening of it. The yen was trading between 110 and 120 against the dollar until mid-March, but fell to around 130 against the dollar in April and weakened to 135 on June 13.

Ketsu Chou, president of Shenjumiaosuan Co., said that the yen has dropped 20 percent in value against the dollar since early this year. That gives overseas investors a 20 percent discount on Japanese properties. The prices of Japanese properties on the website have risen about 10 to 30 percent in value over the past seven years, but fell in yuan due to the recent depreciation of the Japanese currency.

The site operator said that the majority of the Chinese on the site are Chinese in their 30s to 40 s, and they buy one-room apartments in cash in the range between 10 million yen and 20 million yen.

The figure increased in June, as Real Estate Japan, another real estate information website for non-Japanese, received about 200 inquiries a month from January to February.

There are many properties in metropolitan areas, such as Tokyo and Osaka, on the website, while more site users are inquiring about those in Hokkaido, Okinawa and other resort areas.

Overseas investors are aggressively buying hotels and offices.

A major real estate service provider for corporations, surveyed foreign investors at the end of last year and found that 74 percent of respondents were planning to invest more in 2022 than they did the previous year.

The data compiled by CBRE shows that overseas investors spent more than 1 trillion yen annually for buying Japanese properties for the third consecutive year. The figure is expected to reach the same level this year.

Foreign investors look at the difference between yields on profits from properties and borrowing rates when buying properties, said Hiroshi Okubo, a CBRE official in charge of the firm's research business. Demand is high for Japanese properties because of the Bank of Japan's low interest rate policy amid overseas rate hikes. Okubo said that such a situation tends to cause a further drop in the value of the yen, which could drive up the prices of Japanese properties in the domestic currency.